SPACs, special purpose acquisition companies, are shell corporations that raise money and get listed on a stock exchange. Their only purpose is to merge with another company — one that already exists — usually a startup.

This is touted as a quick way to take companies public — avoiding the usual, lengthier route of initial public offerings.

The number of new SPACs plummeted a few years ago. A lot of retail investors lost money betting on them, and they went out of fashion.

Until now. This year is shaping up to be the third busiest year for SPAC activity, according to several data firms.

In some ways, SPACs are a simple proposition. 

“They're basically a company that's listed on the stock exchange that has cash,” said Phillip Braun, a professor of finance at Northwestern University.

He said a SPAC is created with one and only one goal: “To go and search for a company to acquire and merge with.”

While it’s looking — investors can buy shares in a SPAC, with the hopes of big rewards later. 

That prospect sent SPAC activity to historic highs in 2020 and 2021. There were more than 800 of them in those two years. 

Michael Ohlrogge, a law professor at New York University, studied what came of all of that activity. 

“There was a temporary bubble where it looked like the companies going public were doing fantastically well, but pretty quickly that bubble popped, and investors have lost, on average, 60% or 70% or more of their money,” Ohlrogge said.

In large part, he said, because of the lack of transparency with SPACs and their complex internal structures. 

Regulators did issue new rules in 2024, and the number of SPACs coming into the market declined dramatically, until now.

“For sure, we're seeing an uptick,” said Ben Kwasnick, founder of SPAC Research. He’s tracked 81 of them so far in 2025, compared to 57 for all of last year. 

Kwasnick said the main thing driving the SPAC spike is retail investors. 

“There's a new wave of sectors and concepts that people are interested in getting involved in,” Kwasnick said. “And so, SPACs are seeing a resurgence as the quickest way to sort of tap into that investor enthusiasm in those sectors.”

What are those sectors? 

Matt Kennedy, a senior strategist with Renaissance Capital, pointed to new technologies. 

“Think quantum computing, next generation nuclear power, space technology, autonomous aircraft or flying taxis, bitcoin treasury companies,” Kennedy said.

As well as artificial intelligence firms. 

All moonshots, Kennedy warned, where there’s still a lot of risk.